earnings presentation 1q09 final.ppt · 2020-03-12 · yapı kredi 1q09 earnings presentationkredi...

Yapı Kredi 1Q09 Earnings PresentationYapı Kredi 1Q09 Earnings Presentation

BRSA ConsolidatedBRSA Consolidated

İstanbul, 13 May 2009

AGENDA

1Q09 Operating Environment

1Q09 Results (BRSA Consolidated)

Performance by Strategic Business Unit (Bank-only)

Performance by Subsidiaries

Current Trends and Expectations

Annex

2

Negative impact of the global macroeconomic slowdown on Turkey strongly felt in 1Q09; despite significant asset quality deterioration, banking sector still resilient in terms of profitability liquidity & capitalisationbanking sector still resilient in terms of profitability, liquidity & capitalisation

Sharp contraction in GDP in 4Q08 also continuing in 1Q09Significant contraction in industrial output and

4Q08 1Q09GDP Growth (y/y) -6.2% -

Significant contraction in industrial output and foreign tradeContinued downward trend in inflation, further encouraging the CBRT to reduce rates aggressively in 1Q and so far in 2Q (as of April, 450 bps cuts in polic rate to 9 75%)AC

RO

Industrial Production (y/y) -12.5% -22.0%

Exports (y/y) -13.3% -26.0%

Imports (y/y) -20.6% -41.8% policy rate to 9.75%)Towards the end of 1Q, moderate increase in consumer confidence driven by government’s tax incentives and relative stability in global markets Increased expectation of an IMF deal uplifting

MA

p (y y)

Central Bank O/N (eop) 15.0% 10.5%

Consumer Confidence Index 69.9 74.8

I fl ti ( / ) 10 1% 7 9% Increased expectation of an IMF deal upliftingmarket sentiment from end of 1Q onwards

Contraction in loans due to lack of demand and cautious stance of banksMild th i d it d t TL d i ti d

Inflation (eop, y/y) 10.1% 7.9%

Loan Growth 2% -1%

Deposit Growth 8% 3%Mild growth in deposits due to TL depreciation and banks’ continued efforts to ensure fx liquidityDecline in L/D ratio as a function of contracting loan volumes and modestly increasing depositsAccelerating asset quality deterioration alreadyNG

SEC

TOR Loans/Deposits 82% 79%

NPL Ratio 3.5% 4.1%

Cost of Risk 2 5% 2 8%* Accelerating asset quality deterioration, already visible in 4Q08, resulting in further increase in cost of riskNevertheless, profitability and capitalisation maintained thanks to positive NIM evolution driven b CBRT i t t t t

BANK

I Cost of Risk 2.5% 2.8%

Net Interest Margin (NIM) 4.6% 5.3%

Return on Average Equity 17.7% 22.5%

*

*

3

by CBRT interest rate cutsCAR (Deposit Banks) 16.5% 16.7%

Note: Macro data as of March 2009.Banking sector data based on BRSA weekly data as of 27 March 2009 unless otherwise stated * As of February 2009 Annualised ROAE calculated based on the average of current period equity (excluding current period profit) and prior year equity. ROAE of 17.7% refers to full year 2008

*

Yapı Kredi At a Glance in 1Q09

Solid profitability maintained, despite increased cost of risk, as a result of:Strong revenue growth thanks to widening NIM and solid fee performance, despite stable business volumes,

i d b ti ht t di i li d ti d ffi i ff taccompanied by tighter cost discipline and continued efficiency effortsStrong performance of credit cards, private and corporate/commercial business units more than compensating slower growth in retail bankingLoan growth slightly above sector in light of continuous support by Yapı Kredi of its customer base,resulting in further reinforcement of customer relationshipsresulting in further reinforcement of customer relationships17% ytd growth in assets under management; No 2 position maintained with 18.6% market shareContinued asset quality deterioration (that started in 4Q08 as a result of global economic crisis) mainly driven by new NPLs in SME, credit cards and consumer loansBranch expansion plan on a temporary stand by until macroeconomic conditions normalise continuing to bringBranch expansion plan, on a temporary stand-by until macroeconomic conditions normalise, continuing to bring results above expectations

4th largest branch network with 856 branchesFurther improvement in Cost / Income ratio down to 39.9% thanks to high revenues accompanied by tight cost and headcount managementheadcount managementStrong capital base, sound liquidity and comfortable funding position

CAR at 14.60% at Consolidated level (16.13% at Bank level)~USD 410 mln one-year syndicated loan facility secured in Apr ‘09 (all-in cost Libor+2.5%)Strong and stable deposit base (78% of TL deposits contributed by individuals)Strong and stable deposit base (78% of TL deposits contributed by individuals) Comfortable loans/deposits ratio

Sustained profitability from Yapı Kredi’s subsidiaries despite adverse market conditions, also thanks to tight cost disciplineThe new organisational structure launched in Feb ‘09 already delivering positive results in all business divisions

4

The new organisational structure launched in Feb 09 already delivering positive results in all business divisions

AGENDA






Annex

5

Key performance indicators

Net Income(mln TL)

Return on Average Equity (ROAE)(*)


446 471

376

38.3%

27.6%(1)(1)

-1.8 pp(1)

25%

29.4%(1)1.8 pp

1Q08 1Q09 1Q08 1Q09

Cost / IncomeReturn on Assets (ROA)(**)

48.8%

39.9%48.9%

2.93%2.61%

2.47%(1) -9.0 pp(1) 0.14 pp

1Q08 1Q091Q08 1Q09

6(*) Calculations based on the average of current period equity (excluding current period profit) and prior year equity. Annualised(**) Calculations based on net income/end of period total assets. Annualised(1) Normalised to exclude the one-off effects of pension fund provisions on costs, general provision release on revenues and tax settlement expense on

tax provisions in 1Q08. In the case of ROAE, to ensure comparability with 2009, normalisation has been made to reflect the effect of capital increase (registered in 4Q08) on net income and equity

Net income up 6% y/y, 25% y/y if normalised, driven by strong revenue growth coupled with tight cost and headcount management despite increase in loan loss provisions

1Q09 Results (BRSA Consolidated)despite increase in loan loss provisions

Revenues up 15% y/y, 33% if normalised(1)

Revenue growth driven by 33% y/y growth in net interest income due to NIM widening (+70 bps) and 14% y/y growth in fees and commissions

1Q08 1Q09 YoY YoYN(1)

Total Revenues 1,295 1,491 15% 33%Net Interest Income 675 901 33% 33%

Income Statement, mln TL

Operating costs -6% y/y, +8% y/y (normalised to exclude one-off pension fund expense in 1Q08) thanks to tight cost management measures limiting cost impact

Net Interest Income 675 901 33% 33%

Non-Interest Income 620 590 -5% 31%

o/w Fees & Comms. 305 349 14% 14%

Operating Costs 632 594 -6% 8% management measures limiting cost impact of the branches opened in 2008. HR costs up 7% y/y and non-HR costs up 12% y/yOperating income up 35% y/y, 56% if normalised(1)

p g % %HR 241 258 7% 7%

Non-HR* 254 286 12% 12%

Other** 137 50 -63% -9% normalised(1)

Cost of risk at 2.66% (+150 bps vs 1Q08(1)) impacted by deterioration in asset quality driving up provisions

Operating Income 663 897 35% 56%Provisions 88 283 222% 177%

Pre-tax income 575 614 7% 30%Effective tax rate at 23% impacted by increase in general provisions (not originating deferred tax assets as per BRSA)Net income up 6% y/y, 25% if

Tax 129 143 11% 48%

Net Income 446 471 6% 25%

7(1) 1Q08 normalised to exclude the one-off effects of pension fund provisions on costs, general provision release on revenues and tax settlement expense on tax provisions(*) Non-HR costs include HR related non-HR costs, advertising, rent, SDIF, taxes and depreciation(**) Oher includes pension fund provisions and loyalty points on World card

normalised(1)

Resilient balance sheet with strong capital base (Group CAR at 14.60%) and sound liquidity position (L/D ratio at 89%). Stable volumes driven by macroeconomic slowdown and subdued demand

Loans growing slightly above sector (1% ytd) as a result of continued focus on lending activity to support Yapı

1Q09 Results (BRSA Consolidated)by macroeconomic slowdown and subdued demand

1Q08 2008 1Q09 % YoY %YTD

Total Assets 61.0 70.9 72.1 18% 2%

Balance Sheet, bln TL

Kredi customer base. In 1Q09, FC loans in USD terms stable; 5% contraction in TL loans due to low consumer activity

Total Assets 61.0 70.9 72.1 18% 2%

Loans 31.9 38.9 39.2 23% 1%

TL 20.8 24.8 23.5 13% -5%

FC (in $) 8.9 9.6 9.6 7% 0%

Flat deposit volumes, driven by TL depreciation. In 1Q09, 11% decrease in TL deposits driven by lower liquidity pressure and conversion to AUM and FC deposits; 2% growth in FC

Securities 14.7 15.4 16.0 9% 4%

Deposits 36.2 44.0 43.9 22% 0%

TL 19.7 24.8 22.1 12% -11%

FC (in $) 13.3 13.1 13.3 0% 2% p gdeposits in USD terms

Strong AUM growth of 17% ytd

Loans/deposits ratio comfortable at 89% (88% at YE08)

( $)

Shareholders' Equity 5.1 6.9 7.3 43% 7%

AUM 6.6 6.2 7.3 10% 17%

1Q08 2008 1Q09 ∆ YoY (pp) ∆ YTD (pp) Ratios 89% (88% at YE08)

Asset mix maintained with Loans/Assets at 54.4%. Moderate increase in weight of securities driven by FX effect

1Q08 2008 1Q09 ∆ YoY (pp) ∆ YTD (pp)

Loans/Assets 52.4% 54.9% 54.4% 2.0 (0.5)

Securities /Assets 24.1% 21.7% 22.1% (2.0) 0.4

Loans/Deposits 88.3% 88.4% 89.3% 1.0 0.9 y

Wholesale Borrowings /Liabilities at a comfortable 15.5%

Improvement in CAR to 14.60% at Group level and 16.13% at Bank level

p

Borrowings/Liabilities 17.2% 14.8% 15.5% (1.8) 0.6

Consolidated CAR* 12.70% 14.24% 14.60% 1.9 0.4

Bank-only CAR* 14.61% 15.74% 16.13% 1.5 0.4

8(*) 2008 CAR includes full impact of TL 920 mln cash capital increase Note: Loan figures indicate performing loans

Group level and 16.13% at Bank level

Strong growth in revenues benefitting from net interest income performance accompanied by solid fee growth

1 491

Total Revenues (mln TL)

p p y g1Q09 Results (BRSA Consolidated)

Quarterly Revenues (mln TL)

y/y growth y/y growth normalised 29%

1,124 1,157 1,155 1,177

1,491

16%1 295

2008 Average:

1,1531,491

15% 33%

normalised

-24% 66%

29%

1Q08N 2Q08 3Q08 4Q08 1Q0923%24%

13%

16%1,295

1,124Dividend,Trading & Other 14% 14%

-24% 66%

24% 27% Total revenues up 15% y/y, 33% if normalised(1), driven by favorable interest rate environment. Despite stable volumes, quarterly revenues at 1.5 bln TL, (29% higher than 2008 average)

Net Fees & Comms.

34% 34%52% 60%

61%b , ( 9% g e t a 008 a e age)Share of net interest income in total revenues at 61% (vs 60% in 1Q08N) driven by 34% growth in net interest margin14% y/y growth in fees and commissions, driven by

d i i i 2Q08 d it l d i

Net Interest Income

34% 34%

1Q08 1Q 08N 1Q09upward repricing since 2Q08, despite slowdown in lending volume in 1Q09 (especially in retail lending)Share of other income (dividend, trading and other) in total revenues increased to 16% also driven by higher net trading income

9N= Normalised to exclude the one-off effects on revenues of general provision release in 1Q08

Significant expansion in net interest margin thanks to aggressive rate cuts by CBRT leading to sharp decline in cost of depositsate cuts by C ead g to s a p dec e cost o depos ts


Net Interest Income(mln TL)

BANK: Spread Analysis(1)

Subs

+25%675

901

Yield on loans

15.3%16.4% 15.8% 15.9%

14.5% 14.1%14.8%

16.3%

14.6%

12 8%

+33%

13%

12%

Subs

Bank+35%

Cost of deposits

Yield on Securities

10.8% 10.8% 11.0%10.5%

9.9% 10.1%10.9%

12.8%

9.1%

11.4% 11.8%12.4%

12.1% 11.8% 11.6%11.8%

12.8%

10.9%87%

88%

13%

BANK: NIM(1)

(Net interest income / Avg IEAs)

1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09

1Q08 1Q09

Net interest income grew by 33% y/y at Group level, driven by 35% y/y growth at Bank level and 25% y/y growth at SubsB k t l NIM t 5 3% ( 70 b i

(Net interest income / Avg. IEAs)

Cumulative Quarterly

4.7% 4.6%4.9%

4.7% 4.5% 4.6%

5.3%

Bank quarterly NIM up at 5.3% (+70 bps expansion vs 4Q08), thanks to sharp decline in cost of deposits Decline in yield on loans and securities at a much softer pace due to maturity mismatch Benchmark

B d R t ( ) 17 0% 19 9% 19 7% 21 0%18 3% 19 4%

2007 2008 1Q08 2Q08 3Q08 4Q 08 1Q09

14 0%

10(1) All calculations based on average volumes

softer pace due to maturity mismatch Bond Rate (avg) 17.0% 19.9% 19.7% 21.0%18.3% 19.4% 14.0%

Continued focus on lending activity to support Yapı Kredi customer base, especially in corporate/commercial banking


p y p g

Composition of Total Loans(1)Y/Y 1Q09 vs 4Q08

YKB Sector YKB Sector

1Q09 Loan Growth vs Sector

(4) (4)

34.8% 40.2%FC

Companies(excluding commercial


Total Loans 23% 16% 1% -1%

TL Loans 13% 11% -5% -2%

FC Loans ($) 7% 1% 0% 4%

(4) (4)

20.8% 17.6%

20.0%18.6%

Credit Cards

TL

24 4%

commercial installment)

FC Loans ($) 7% -1% 0% -4%

Consumer Loans 28% 13% 0% -1%

Housing Loans 29% 10% 4% -1%

Auto Loans 5% 11% -7% -10%

8.1% 8.4%5.4% 5.9%1.7% 1.5%9.2% 7.8%

1Q08 1Q09

MortgageGen. Purp.Auto

Commercial Installment*

24.4% 23.6%General Purpose 33% 21% -4% 0%

Credit Cards 4% 18% -7% -4%

Companies 28% 17% 3% 0%

11%

1Q08 1Q09

SMEQ408: 3%Q109:-1%

Comm. Installment* 4% 3% -4% -4%Share of companies in total loans increasing due to continued lending to support Yapı Kredi clients with sustainable businessesS /

Loan Growth by Business Unit(2) (q/q growth)

3% 2% 2% 1%

-1%-5%

-2%

0% 2%

Retail Credit Cards Private Commercial Corporate

Stable/declining retail loan volumes due to decreased demand and increased focus on risk management, especially in credit cardsIncrease of FC loans also driven by FX effect (TL depreciation)

** **

Retail Credit Cards Private Commercial Corporate4Q08 1Q09

11(1) Total performing loans as per BRSA consolidated figures (2) Loan growth as per MIS data based on monthly averages. Please refer to Annex for definitions of Strategic Business Units(3) Sector data based on weekly BRSA unconsolidated figures(*) Proxy for SME loans as per BRSA reporting(**) Excluding the effect of TL depreciation

(TL depreciation)

Stable deposit volumes vs 2008 year-end, also on the back of lower liquidity pressurelower liquidity pressure


BANK: Deposit Market Shares1Q09 Deposit Growth vs Sector

9 7% 9 8%

10.7% 10.8%11.4% 11.8% 11.7%

12.5% FC

Y/Y 1Q09 vs 4Q08


Total Deposits 22% 21% 0% 3%

(1) (1)

9.4% 9.1%9.7%

9.5% 9.8%9.3%

8.6% 8.2%8.8% 8.4%

8.7%

7.7%TL

TotalTL Deposits 12% 20% -11% 1%

FC Deposits ($) 0% -5% 2% -2%

2008 1Q09

2007 1Q08 2Q08 3Q08 4Q08 1Q09

Demand/Total Deposits 14% 13% 15% 14%

Stable deposit volumes vs YE08; also supported by TL devaluation

11% decline in TL deposits in 1Q09 driven by (1) release of higher cost TL deposits on the back of lower liquidity pressure, (2) conversion from TL deposits partially to AUM and partially to FC deposits by q y p , ( ) p p y p y p ycorporate customers

Weight of demand deposits over total at 15% (vs.14% at sector level, and vs. 14% at YE08)

12(1) Sector data based on weekly BRSA unconsolidated figures

Solid performance in fees and commissions

Fees up 14% y/y at Group levelNet Fees & Commissions

(mln TL)


8%9%

Fees up at 14% y/y at Bank level, driven by upward repricing since 2Q08 especially in retail lending, despite slowdown in volumes in 1Q09

Continuing improvement in coverage of total costs

14%305

349

Subs

92% 91%

Co t u g p o e e t co e age o tota costsby net fees and commissions (+4.5 pps vs 2008)

BANK: Composition of Bank

14%

Insurance 2.4%

Customer Derivative

4.0%Other*

1Q08 1Q09

pFees & Commission Received (1Q09)

13% of total credit card fees are annual

subscription feesFees & Commissions / Total Costs

Credit Cards 49.4%

Lending

Asset Management

8.4%

Account Maint. 1.7%

2.4%9.1%

Composition 1Q08

Credit Cards 49.9%

Lending Related 23.9%

48.2%54.2% 58.7%

Lending Related 25.1%

Asset Mng. 9.4%

Account Maint. 1.4%

Insurance 1.8%

Cust. Derivat. 3.7%1Q08 2008 1Q09

13

Other* 9.9%

(*) Other includes money transfers, equity trading, campaign fees etc.

Limited cost growth as a result of tight cost containment and accelerated efficiency effortsy

Composition of Costs (mln TL)


Total costs, -6% y/y due to limited growth in core cost basis and one-(mln TL) growth in core cost basis and one-off effect of pension fund provision in 1Q08

Total costs +8% y/y if normalised(1)

to exclude one-off effect of 631594 -6% 8%

y/y growth y/y growth normalised

22%10%

8%Other*

pension fund provision in 1Q08 thanks to tight cost management measures limiting cost impact of the branches opened in 2008Cost growth driven by 12% y/y

550594 6% 8%

-63% -9%

40% 46%48%

Non HR**

Cost growth driven by 12% y/yincrease in non-HR costs and limited by 7% y/y increase in HR costsOther costs down 63% y/y,

12% 12%

38% 44% 43%HR

-9% if normalised(1), driven by tight management of World loyalty point expenses and lower pension fund provisionBank headcount at 14 805 +13%

7% 7%

1Q 08 1Q08N 1Q 09

Bank headcount at 14,805, +13% vs the beginning of the branch expansion plan (July 2007) despite 216 new branch openings during the same period. Headcount stable vs YE08

14(*) Includes pension fund provision expense and loyalty points on Wold card(**) Non-HR costs include HR related non-HR costs, advertising, rent, SDIF, taxes and depreciation(1) Normalised to exclude the one-off effects of pension fund provision in 1Q08(2) Including consolidation adjustments

vs YE08

Asset quality deterioration continuing in 1Q09; mitigating measures put in place to control pace of increase as well as to support customers in temporary difficultycustomers in temporary difficulty

NPL Ratio and Specific Coverage General Provisioning


NPL ratio by Segment63%

59%

4.9%6.2%

4.3%5.3%

2008 1Q09

Consumer loans(4) 4.3% 6.2%

Credit Cards 6.3% 9.0%

59%

1.2% 1.3%

St d d W t h2008 1Q09

2008 1Q092008 1Q09

SME(3) 6.8% 9.0%

Corp & Commercial 2.5% 2.6%

Standard Watch

NPL ratio increasing to 5.3% (vs 4.3% at YE08) driven by new NPLs in SME, credit cards and consumer loans. No signs of deterioration in corporate and commercial segmentCost of Risk(1)

2008 1Q09

1.06% 1.16% 1.15%1.16%1.43%

2.66%

1 09%1.92%

Specific coverage at 59% (vs 63% at YE08) impacted by ageing effect of new NPL inflowsTotal cost of risk at 2.66% (+123 bps vs YE08); specific cost of risk at 1.92% (+83 bps vs YE08)Priorit actions/crash programs la nched in monitoring and

Total Cost of Risk(2)

0.91% 0.99%0.91% 0.96%1.09%

2007 1Q08 1H08 9M08 2008 1Q09

Priority actions/crash programs launched in monitoring and collections also following introduction of new governance and organisation of credit functionLaunch of restructuring program for selected SME, credit cards and commercial loans starting from April 2009 also to

Specific Cost of Risk

15

g psupport customers in temporary difficulty

(1) Cost of risk = total loan loss provisions / total gross loans(2) In 2008, adjusted to exclude the one-off effect of general provision release in 1Q(3) Companies with turnover less than 5 mln USD(4) Including cross default. If excluding, 1Q09: 3.7%

Branch expansion plan, on a temporary stand-by until macroeconomic conditions normalise, continues to bring results above expectations

While YKB remains committed to long term growth as a result of acceleration of

YKB’s Branch Network(1)


1Q092008 term growth, as a result of acceleration of global volatility, branch expansion plan for 2009 has been put on temporary stand-by until market conditions normalise

Relaunching branch expansion plan to be

856 branches

861 branches

Realisations vs Plan(2)Relaunching branch expansion plan to be considered in 4Q09 upon the first positive signs of macroeconomic recovery

Contribution to customer business of branches opened within the scope of the

Revenues 5% above planCustomer Business(3): 17% above planCosts 10% below plan branches opened within the scope of the

branch network expansion plan increased to 2.1 bln TL (63% increase ytd in 1Q09)

Despite the macroeconomic conditions, new branches are above budget in terms

Customer Business Generation by New Openings since launch of plan(2)

(mln TL)

2 117

p

1,088 62%

gof revenues and customer business, andbelow budget in terms of costs

Fourth largest branch network with 856(1)

branches (including net closure of 5

Mass & Uppermass

2,117

902

127

38%

( goverlapping branches) and 9.7% market share covering 70 cities

57% of the branch network is located in top 4 cities while 43% is in mid/small Deposits AUM Loans Cust.

SME

16

cities(1) Including one off-shore branch (2) As of March 2009(3) Customer business: loans + deposits + AUM

AUMBusiness(3)

AGENDA






Annex

17

Strong performance of credit cards, private and corporate/commercial banking more than compensating slower growth in retail banking

vs. Budget

Revenues up 27% y/y but below budget

Weight in Bank Drivers of revenue growthPerformance by SBU

YoY(1Q09 – 1Q08)

Revenues(mln TL)

29% 36%

Revenues Customer Business**

351 Retail 27%

Revenues up 27% y/y but below budget due to sluggish activity on consumer lending SME revenues in line/above expectation (+41% y/y)

-29% 36%

275 Credit

Cards*29%

Higher revolving ratio, profitability focusand significant decrease in cost of funding sustaining 29% y/y growth of revenues

+8%23%

41 Private 38%

Growth in customer business, positively impacted by structured productsLeverage on dedicated segment focus38% y/y revenue growth

+15%3%

64 Corporate 35% +Selective volume growth to support existing core clientsDisciplined pricing approach to improve risk adjusted return on capital, resulting i 35% / th

20%5%

216 Commercial 43%

Volume growth on selected quality/lower risk core clientsFocus on revenue oriented initiatives tomaintain adequate risk/return profile

+

in 35% y/y revenue growth

21%18%

18

q presulting in 43% y/y revenue growth

(*) Net of loyalty point expenses on World cards(**) Customer business = Loans + Deposits + AUMNote: all figures based on MIS data

AGENDA






Annex

19

Sustained profitability from subsidiaries despite adverse market conditions, also thanks to tight cost disciplineconditions, also thanks to tight cost discipline

YK Leasing

Revenues(mln TL)

Revenue (y/y growth)

ROE Key Highlights

51Despite sector slowdown, revenues still growing above 10% but profitability negatively impacted by asset quality deterioration14%11%

uct F

acto

ries

g

YK Factoring 16

#4 in the sector with 10.5% market shareOutstanding growth supported by both domestic andinternational business, customer acquisition and favorable interest rate environment#2 in the sector with 19.7% market share Strong performance in equity trading and option DCD business

48%68%

Cor

e Pr

odu YK Yatırım

YK Portföy

52

19 154%

Strong performance in equity trading and option DCD business despite adverse market conditions leading to increased profitability and market shares#1 in the sector in terms of total ISE transaction volumeSustained profitability supported by increase in AUM volumes impacting revenue growth

103%

3%

7%*

e Su

bs YK Sigorta

# 2 in the sector in mutual funds with 18.6% market share

29** 15%Difficult first quarter for the sector in both health and non-health branchesSelective approach maintained to protect profitabilityStronger cooperation with Yapı Kredi’s branch network#2 in the health insurance market with 15 2% market share

-4%

Insu

ranc

YK Emeklilik

#2 in the health insurance market with 15.2% market shareContinuous and strong growth in life insurance#5 in the life insurance sector with 5.1% market share#3 in the sector with private pension market share of 14.8%Stronger cooperation with YKB’s branch network

24 25%

5 50% 14% St f th b k f i th ff t d

25%

nter

natio

nal

Subs YK Moscow

YK Azerbaijan 5 50% 14%

8 39% 8%

Strong performance on the back of organic growth efforts andproviding support to Turkish YKB customers in the country

Performance mainly driven by business generated byTurkish Yapı Kredi customers

20

In YK NV Asset quality concerns limiting profitability in YK Moscow14 18% 9%* Including dividend income from YK Portföy** Including dividend income from YK EmeklilikNote: YKB bank-format financials have been used for publicly traded subsidiaries instead of their announced financials for consistency purposes Following the launch of the new organisational structure in February 2009, management changes took place in the following subsidiaries: YK Leasing, YK Factoring, YK Portföy, YK Sigorta, YK Emeklilik

AGENDA






Annex

21


General economic situation remains difficult. After some pick up of activity driven by tax incentives, slowdown continues despite increasing optimism in the market.

Macro & Banking Sector Yapı Kredi Forecast*

GDP growth: -3 2%

2009tax incentives, slowdown continues despite increasing optimism in the market. Recession likely to continue throughout ’09; positive signals of macroeconomic recovery expected in 4Q

Lower than anticipated inflation likely to trigger further interest rate cuts by CBRT

Volumes flat/contracting so far; growth expected to pick up from 2H onwards

GDP growth: -3.2%

O/N rate (end-year): 8.5%

Sector loan growth: 7%g ; g p p p

Deterioration in asset quality likely to continue, incorporating full impact of recession

Favourable net interest margin evolution so far, yet trend not fully sustainable, given low business activity and competitive pressure

Sector deposit growth: 8%

Sector NPL ratio: 5.7%

Sector cost of risk: 2.9%

Yapı Kredi Actions/Objectives

Continue to Focus on Long-Term Actions to Achieve Sustainable Growth

CapitalFunding/Liquidity

Profitability

Leverage on new governance and organisation of credit function to further improve credit managementLaunch of restructuring program for selected SME, credit cards

Target to maintain profitability at levels comparable to 2008Maintain high discipline on pricing so as to keep cost of funding at optimal level

Continous emphasis on liquidity with increased focus on cost of funding

Asset

Strong capital position allowing Yapı Kredi to fully absorb potential impact of current market volatility

Profitability

Efficiency

Launch of restructuring program for selected SME, credit cards and commercial loans starting from April 2009 to support customers in temporary diffuculty

Sustain customer base with adequate credit liquidity to further reinforce customer relationshipsMaintain adequate risk/revenue profile

at optimal level Leverage on new governance of subsidiaries to further develop cooperation between network and product factories

Commercial Business

Asset Quality

Implementation of further actions to manage at best cost baseTake advantage of current market environment to improve efficiency/productivity so as to allow further investments on

22

Leverage on new organisation to further improve commercial productivity

growth when the market recoversOngoing headcount freeze, disciplined headcount management

* Yapı Kredi Forecasts as of 12 May 2009

AGENDA

AnnexAnnexDetailed Performance by Strategic Business Unit

Other

23

Definitions of Strategic Business UnitsPerformance by SBU

Retail:

SME: Companies with turnover less than 5 mln USD

Affluent: Individuals with assets less than 250K TL

Mass: Individuals with assets less than 10K TL

Commercial: Companies with annual turnover between 5-100 mln USD

Corporate: Companies with annual turnover above 100 mln USD

Private: Individuals with assets above 250K TL Revision to segmentation criteria on 1 Jan 2009 in the

context of service model fine-tuning resulted in changes in

the definitions of businessthe definitions of business Units

24

Diversified revenue mix with retail focused loan and depositportfoliop

Performance by SBU

Revenues & Volumes by Business Unit(1) 1Q09 (Bank-only)

28.8% 26.8%Retail (incl. SME) 31.6% 26.5%

1Q08 1Q08 1Q08

22 6%18.6%

41.2%

24.4%22.4%

40.5%

5.2% 24.4%

3.3%0.6%

25.0%

22.6%Credit Cards(2)

Private

Corporate

24.4%

5.4%

3.4%

0.7%

21.2%27.7%

17.8%

19.1%

Corporate

Commercial17.3%

17.5%

22.2%29.6%

14.7%

Revenues Loans Deposits

Treasury& Other 18.0%

29.2%

14.2%

Revenues Loans Deposits

25(1) Please refer to Annex for definitions of Business Units(2) Net of loyalty point expenses on World cardNote: Loan and deposit allocations based on monthly averages (source: MIS data)

58% of retail banking revenues generated by SME business, constituting 8% of total retail clients

Retail

Retail Banking(1) - Composition ofActive Clients & Total Revenues

(TL 1Q09)

gPerformance by SBU

8%

(TL, 1Q09)

351 mln

~466K active SME clients generating 58% of total Retail revenues 8% of total retail clients are SMEs

SME

YoY Growth

6.0 mln +27% 9.8 bln 17.1 bln

4%8%

58%48%

20%8% of total retail clients are SMEs generating 48% of loans and 20% of depositsHighest rate of revenue growth on an annual basis driven by SME

Affluent

+41%

42%

58% an annual basis driven by SME segment (+41% y/y)Mass sub-segment generating 28% of total Retail revenues with ~5.3 mln clients

+41%

88%

13%18%

mln clientsMass sub-segment revenues growing at 16% y/yAffluent sub-segment generates

% f

Mass+1%

28% 34% 37% 13% of total Retail revenues+16%

# of Clients Revenues Loans Deposits

26(1) Please refer to Annex for definitions of Business Units

Retail (mass & affluent) banking revenues up 11% y/y impacted by slugglish demand on consumer lending

Retail (Mass & Affluent)

p y gg gPerformance by SBU

Revenues/ (Customer Business(1))

Mln TL 1Q09 YoY YTD

Revenues 146 11%Revenues 146 11% -

Loans 5,118 34% -1%

Deposits 13,608 27% 4%

AUM 2 610 1% 11%3.18% 3.14%

3.81%3.41%

2.77%AUM 2,610 1% 11%

% of Demand in Retail Deposits 12.7% -2.1 pp -0.4 pp

TL % in Retail Deposits 73.2% 4.3 pp -0.2 pp

% of TL in Retail Loans 100.0% 0.0 pp 0.0 pp 1Q08 2Q08 3Q08 4Q08 1Q09

Retail (mass & affluent) banking revenues performing well but much less than expectations impacted by contraction in consumer lending and subdued fee and commission growth not compensated by lower cost of funding

pp pp

Contraction in lending (-1% ytd) due to sluggish demand on consumer lending driven by low visibility and uncertainty Strong emphasis on improving customer satisfaction Consumer loan NPL ratio at 6.2%(2). Increased focus on asset quality and credit risk management in

i f ti i d t i tiview of continuing deteriorationInitial positive results already visible in new ehanced service model for affluent segment launched in early 2009Launch of a partnership with Cardif in April for distribution of unemployment coverage bundled with

l dit d d i t ti

2727Note: Volumes (loans, deposits and AUM) based on monthly averages except for revenues/loans ratio which is based on 3-month average. MIS data(1) Customer business: Loans + Deposits + AUM(2) Including cross default. If excluding, 1Q09: 3.7%

consumer loans, credit cards and income protection

SME banking generating high revenue growth (+41% y/y); more selective lending and better monitoring/collections so as to control asset quality deterioration

Retail (SME)

control asset quality deteriorationPerformance by SBU


Mln TL 1Q09 YoY YTD(Customer Business )

Revenues 204 41% -

Loans 4,721 21% -1%

Deposits 3,471 31% -5%

AUM 8 1% % 8 35%8.66%

9.16% 9.08% 9.10%

AUM 558 -1% 7%

% of Demand in SME Deposits 30.9% -5.3 pp 1.4 pp

TL % in SME Deposits 68.7% 2.3 pp -4.9 pp

% of TL in SME Loans 97 1% 1 2 pp 0 6 pp

8.35%

SME revenues continue to perform well (+41% y/y) as a result of actions taken to ensure adequate risk-return profile

% of TL in SME Loans 97.1% -1.2 pp -0.6 pp1Q08 2Q08 3Q08 4Q08 1Q09

adequate risk return profile Contraction in SME lending (-1%ytd) driven by more selective approach and sluggish business activitySME NPL ratio at 9.0%. Increased focus on asset quality and credit risk management continued market deterioration that started in 2H08:market deterioration that started in 2H08:

limitations on branch manager authorityreinforcement of monitoring, work-out and collections activitiesSME scorecard to roll out in May

2828Note: Volumes (loans, deposits and AUM) based on monthly averages except for revenues/loans ratio which is based on 3-month average. MIS data(1) Customer business: Loans + Deposits + AUM

Strong credit card revenue growth as a result of higher revolving ratio, profitability focus and significant decrease in cost of funding

Credit Cards

Performance by SBU

235 ths new World cards issued

in cost of fundingMln TL 1Q08 1Q09 YoY YTD

Revenues 246 297 21% -~235 ths new World cards issued in 1Q09

Credit card net revenues(1) up 29% y/y due to higher revolving ratio, profitability focus and significant

Net Revenues(1) (mln TL) 213 275 29% -

# of Credit Cards(2) (mln) 6.9 7.7 11% -1%

# of merchants (ths) 215 261 21% 1%

# f POS ( h ) 2 9 316 22% 1% profitability focus and significant decrease in cost of fundingContinued focus on review of installment and loyalty points expensesCredit Card Volumes & Market Shares(4)

# of POS (ths) 259 316 22% 1%

Revolving Ratio(3) 27.3% 30.7% 337 bps 388 bps

Activation 86.1% 84.3% -180 bps 80 bps

Volumes (bln TL):

6.7 9.8 9.8

expensesCredit Card NPL ratio at 9.0% Increased asset quality concerns determined suspension of Direct Sales Force expansion in Sep 08

Credit Card Volumes & Market Shares

Market Shares:

21.1% 21.2% 21.4%17.6%

Sales Force expansion in Sep 08 and transfer of 85 DSF employees to collectionsReceived “Best of the Best in Europe in 2009” award by Visa

Outstanding Issuing Acquiring No. of Cards

Europe in 2009 award by Visa Europe

#1 #2 #15

2929(1) Net of loyalty point expenses on World card(2) Including virtual cards (1Q09 :1.5 mln, 1Q08: 1.2 mln) (3) Excluding NPL(4) Market shares and volumes based on bank-only 12-month cumulative figures(5) Based on personal credit card outstanding volume. Total credit card outstanding volume (also including corporate cards): 20.7%

Private banking revenues up 38% y/y, positively impacted by the take off in AUM volumes driven by lower interest rate environment

Private

Performance by SBU


Mln TL 1Q09 YoY YTD(Customer Business )

Revenues 41 38% -

Loans 230 17% -2%

Deposits 10,367 14% -9%

AUM 2 167 12% 35%AUM 2,167 12% 35%

% of Demand in Priv. Deps. 5.2% 0.7 pp 1.9 pp

TL % in Private Deposits 53.5% 1.7 pp -5.8 pp

% of TL in Private Loans 100 0% 0 0 pp 0 2 pp

1.07% 1.10% 1.00% 1.13%1.29%

Private banking revenues up 38% y/y positively impacted by the pick up in AUM volumes (+35% ytd), reversing the contraction trend in 2008

% of TL in Private Loans 100.0% 0.0 pp 0.2 pp1Q08 2Q08 3Q08 4Q08 1Q09

gPrivate banking significantly contributing to Bank’s total asset gathering growth through new tailor-made product offerings (structured products and options), leveraging on dedicated segment focus9% ytd contraction in deposits due to lower interest rate environment. Nevertheless, private banking deposits contribute 25% of Bank’s total depositsdeposits contribute 25% of Bank s total depositsContinued focus on leveraging on product factories in distribution of asset management and brokerage productsInitial positive results already visible in new ehanced service model for private segment launched in

30

early 2009Note: Volumes (loans, deposits and AUM) based on monthly averages except for revenues/loans ratio which is based on 3-month average. MIS data(1) Customer business: Loans + Deposits + AUM

Continued focus on corporate lending activity so as to support Yapı Kredi customer base and reinforce relationships

Corporate

Yapı Kredi customer base and reinforce relationshipsPerformance by SBU

Revenues/(Loans + Deposits)

Mln TL 1Q09 YoY YTD

Revenues 64 35% -

Loans 8,968 46% 2%

Deposits 7,929 38% -10%

AUM 118 32% 11% 1.63% 1 49% 1.61% 1 51%AUM 118 -32% 11%

% of Demand in C. Deposits 6.7% -3.8 pp 0.7 pp

TL % in Corp. Deposits 28.2% -22.4 pp -10.3 pp

% of TL in Corp Loans 13 1% -3 0 pp -5 3 pp

1.49%1.27%

1.51%

1Q08 2Q08 3Q08 4Q08 1Q09

Corporate banking revenues up 35% y/y driven by continued focus on lending activity on selective basisSelective volume growth (2% ytd) to support existing core clients in temporary difficulty and

% of TL in Corp Loans 13.1% -3.0 pp -5.3 pp 1Q08 2Q08 3Q08 4Q08 1Q09

reinforce relationshipsDisciplined pricing approach to improve risk adjusted return on capitalMaintained focus on cash management products and high margin areas including trade finance, project finance and acquisition finance; leverage on leasing and factoring productsRelatively sound asset quality (Corporate/Commercial NPL ratio at 2.6%) with focus on reviewing portfolios to manage exposures at risk through strenghtened collateral or eventually exits/restructuringNew organisation already delivering positive results in terms of cooperation with product factories (l i d f t i )

31

(leasing and factoring)

Note: Volumes (loans, deposits and AUM) based on monthly averages except for revenues/loans ratio which is based on 3-month average. MIS data

Continued selective commercial lending activity so as to support Yapı Kredi customer base and reinforce relationships

Commercial

Performance by SBU

Revenues/(Loans + Deposits)

Mln TL 1Q09 YoY YTD

Revenues 216 43%Revenues 216 43% -

Loans 10,871 28% 0%

Deposits 6,116 31% -1%

AUM 334 30% 50%

4.71% 4.62% 4.80% 4.82%5.11%

AUM 334 30% 50%

% of Demand in Com. Deposits 26.4% -2.9 pp 0.0 pp

TL % in Comm. Deposits 42.4% -6.0 pp -4.8 pp

% of TL in Com. Loans 41.5% -10.1 pp -4.9 pp 1Q08 2Q08 3Q08 4Q08 1Q09

Commercial banking revenues up 43% y/y driven by volume growth on selected quality/lower risk core clientsStrong emphasis on supporting existing core clients while selective acquisition of new clients in

d t t d ith d i k h

pp pp 1Q08 2Q08 3Q08 4Q08 1Q09

underpenetrated areas with sound risk approachFocus on revenue oriented initiatives to maintain adequate risk/return profile Expanding product specialist approach (including cash management products, trade finance and TMU) to increase penetration and revenues; leverage on leasing and factoring productsR l ti l d t lit (C t /C i l NPL ti t 2 6%) ith f i iRelatively sound asset quality (Corporate/Commercial NPL ratio at 2.6%) with focus on reviewing portfolios to manage exposures at risk through strenghtened collateral or eventually exits/restructuringNew organisation already delivering positive results in terms of cooperation with product factories (leasing and factoring)

32

(leasing and factoring)

Note: Volumes (loans, deposits and AUM) based on monthly averages except for revenues/loans ratio which is based on 3-month average. MIS data

AGENDA

AnnexAnnexDetailed Performance by Strategic Business Unit

Other

33

82% of securities portfolio invested in HTM

Securities Composition by Type Securities Composition by Currency(mln TL)

Annex

53% 55%

AFSTrading

14,718 15,385 15,9759%

FC

4%7% 12% 12%

3% 5% 6%

48% 47% 45%

52% 53% 55%

HTM

TL

FC

(17% FRN) (16% FRN) (17% FRN)90% 83% 82%

1Q08 2008 1Q09

TL(74% FRN) (76% FRN) (76% FRN)

1Q08 2008 1Q09

Share of HTM decreasing to 82% (vs. 90% in 1Q08), while share of AFS increasing to 12% (vs. 7% in 1Q08) to comply with liquidity regulation

Held to maturity (HTM) mix in total securities higher at bank level at 85%

FX open position is kept minimal, restricted with VaR and position limits; monitored on a daily basis

9% increase in total securities y/y, totally driven by FX effect (+0.2% y/y in LC securities, -12% in FC securities in USD terms); share of securities in total assets at 22.1%

34FRN: Floating Rate Notes

International BorrowingsAnnex

catio

ns

1.4 bln USD outstandingSept 09: ~USD 1 bln, Libor + 75 bps, 1 year

Synd

ics

Apr 10: ~USD 410 mln, Libor + 250 bps, 1 year

1 4 bln USD outstanding resulting from market transactions concluded in Dec 06 and Mar 07

Secu

ritisa

tions 1.4 bln USD outstanding resulting from market transactions concluded in Dec 06 and Mar 07

7-8 year, 6 wrapped tranches, LIBOR+18 bps-35 bps + insurance premiumsNo principal repayment in ’09

Soa

ns

€1,050 mln outstanding€500 mln - YKB Mar 06 (10NC5, Libor+2.00% p.a.)€ ( C % )

Subl

o €350 mln - Koçbank Apr 06 (10NC5, Libor+2.25% p.a.)€200 mln - YKB Jun 07(10NC5, Libor+1.85% p.a.)

Sace Loan: €100 mln in Jan 07 to support Italian trade finance transactions

Othe

r

Sace Loan: €100 mln in Jan 07 to support Italian trade finance transactions(5 years, all-in Euribor+1.20% p.a.) EIB Loan: €100 mln Jul 08 to support SMEs in Turkey (10 years). No principal repayment in ‘09 IBRD (World Bank) Loan: $35 mln 6 year loan signed in Nov 08 to be disbursed on a projectbasis (Libor+1 50% p a ) No principal repayment in ’09

35

basis (Libor+1,50% p.a.). No principal repayment in ’09

Enquiries :

Yapı Kredi Investor RelationsYapı Kredi Investor Relations

[email protected]

36

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